July 2, 2009

In the closing days of Nevada's legislative session, a bill was passed that called for the state's Public Employees' Retirement System to make known which of its investments are in companies that do business in Iran.

While we certainly harbor no affection for the ruling regime in Iran and usually applaud any efforts made to open up state government, this particular bill uses transparency as a cover for something far more insidious.

As Geoffrey Lawrence explains:

Constitutional provisions prohibit the Nevada Legislature from dictating how money in the Public Employees' Retirement System is invested. However, in the final days of the recent legislative session, state lawmakers passed a law attempting to do exactly that.

Assembly Bill 493 would require NV PERS to delineate the portion of its investments maintained in companies that do business in Iran. While this requirement does not allow legislators to direct precisely how PERS assets are invested, the intent is clear. As Senate Majority Leader Steven Horsford said, "transparency changes behavior."

The Nevada Policy Research Institute has long advocated greater transparency in government and in no way opposes sunlight on the investment decisions of NV PERS. However, legislative leaders have indicated an intention behind Assembly Bill 493 that goes beyond simple transparency. Clearly the intent is to isolate for inspection only some particular investments — those that individual lawmakers either view with personal disdain or see laden with opportunities for political grandstanding.

Read the full commentary for an in-depth look at what is happening in California because of lawmakers' desire to invest in "socially desirable" companies at the expense of more profitable ones.